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Academic Commons Search Resultsen-usThe "Stationarity" of Shadow Prices of Factors in Project Evaluation, with and without Distortionshttp://academiccommons.columbia.edu/catalog/ac:152870
Bhagwati, Jagdish N.; Wan, Henryhttp://hdl.handle.net/10022/AC:P:14780Thu, 27 Sep 2012 00:00:00 +0000The article investigates the Ronald Findlay-Stanislaw Wellisz and T. N. Srinivasan-Bhagwati (F-W-S-B) two-by-two small-country model of traditional international trade theory. Section I recapitulates the basic F-W-S-B analysis, retaining the two-by-two model but distinguishing between the with-distortion and the no-distortion cases. Section II examines the many-good-and-factors cases: goods equal factors, no distortion; good equal factors, with distortion; goods outnumber factors, no distortion; goods outnumber factors, with distortion; factors outnumber goods, no distortion and factors outnumber goods, with distortion. Section III offers concluding observations, indicating the applicability of the analysis to other problems in trade theory and the relationship of the results to mathematical programming. The F-W-S-B model is characterized by three key features: constant-returns-to-scale production functions; two primary factors producing two graded goods; and fixed foreign prices for the two traded goods. The uniqueness and stationarity of the marginal variational shadow prices in the two-by-two F-W-S-B model, with and without the specified distortions, do not necessarily carry over to the cases with unequal numbers of goods and factors that need to be analyzed as soon as the author consider many goods and factors. The analysis leads to many observations. First, the relative numbering of factors and goods is of signifiance. Second, the analysis has clear applicability to the transfer problem, conceived not as a transfer of purchasing power, but rather as a transfer of factors of production as may be the case when reparations payments have to be made in barter. Third, the analysis has applicability therefore to the theory of international factor mobility.Economic theoryjb38Political Science, EconomicsArticlesOn Reanalyzing the Harris-Todaro Model: Policy Rankings in the Case of Sector-Specific Sticky Wageshttp://academiccommons.columbia.edu/catalog/ac:152876
Bhagwati, Jagdish N.; Srinivasan, T. N.http://hdl.handle.net/10022/AC:P:14781Thu, 27 Sep 2012 00:00:00 +0000In a brilliant and pioneering paper, John Harris and Michael Todaro introduced a model with two sectors, manufacturing (urban) and agriculture (rural), a (sticky) minimum wage in manufacturing and consequent unemployment. They also introduced a labor allocation mechanism under which, instead of the usual equalization of actual wages, the actual rural wage was equated with the expected urban wage; the latter was defined as the (sticky) minimum wage weighted by the rate of employment, so that, unlike in the standard rigid-wage models of trade theory, the unemployment resulting from the minimum wage is to be construed as specific to the urban sector. In the context of this model, Harris and Todaro analyze two policies: a wage subsidy policy in the manufacturing sector and a labor-mobility restriction policy. They argue that the former, as well as the latter, can be used to improve welfare, defined as a function of available goods in the usual way; but that, to attain the optimal first best solution, both policies are necessary.Economic theory, Economics, Laborjb38Political Science, EconomicsArticlesThe Global Correspondence Principle: A Generalizationhttp://academiccommons.columbia.edu/catalog/ac:152866
Bhagwati, Jagdish N.; Brecher, Richard A.; Hatta, Tatsuohttp://hdl.handle.net/10022/AC:P:14779Thu, 27 Sep 2012 00:00:00 +0000This paper generalizes the Global Correspondence Principle by extending, in two major ways, Paul Samuelson's 1971 analysis of the exchange rate response to an international purchasing-power transfer. We analyze the price effect of a shift in any parameter, not necessarily a transfer. We then explore the resulting adjustments in any nonprice variable such as welfare. As our analysis shows, the direction of these adjustments depends neither on whether they are small or large nor on whether equilibrium is locally stable or unstable.Economic theoryjb38Political Science, EconomicsArticlesWill Free Trade With Political Science Put Normative Economists Out of Work?http://academiccommons.columbia.edu/catalog/ac:99903
O'Flaherty, Brendan Andrew; Bhagwati, Jagdish N.http://hdl.handle.net/10022/AC:P:15550Fri, 25 Feb 2011 00:00:00 +0000We resolve the determinacy paradox.Economic theorybo2, jb38Political Science, EconomicsWorking papers